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Costa Rica for Sale
By Ruben Alberto Ortiz Vega
(Taken from La Republica newspaper)Costa Rica is for sale and already almost completely sold. Costa Ricans, go to any beach in our country and ask who the owner of any given property is. Almost invariably the answer will be: it belongs to a gringo, a European or a foreigner.
To a lesser degree that same thing is happening in our plains and mountains. Look anywhere in the country you go and you will see the fateful and disastrous “For Sign” sign. Travel around this country and ask: Who owns that business, that plantation, that industry. You will hear that it belongs to gringos, Germans, Colombians, and each day that passes there are less Costa Ricans who own property. How much is really ours? What is left?
The generations that put up the For Sale signs around this country in the last decades, especially since the 1970s, will be remembered by future Costa Ricans as the generations that sold the country.
They sell our beaches, plains, mountains, rivers, volcanoes, forests, bodies, minds, dignity and even worse, our consciences.
If you want to make a good list of what is being sold in this country, ask a pirate taxi driver at the Juan Santamaria Airport. In less than five minutes he will tell you everything that is for sale from pieces of land to the bodies of our teenagers.
Ask what any dry rocky outcrop of land costs near the beaches (that were ours) in this country. A million dollars “Sir”; “but, do you speak English, humm…?”
Awaken Costa Ricans. We have lost so much and continue living the illusion that this country is ours. Let’s do something now. Let’s begin by recovering our national conscience, rescuing it from the sleepiness of the dollar it has fallen into. Let’s reconsider what is happening or very soon we will become true foreigners in our own country.
Meanwhile… I ask the last Costa Rican that leaves the beaches of Costa Rica to please bring the national flag with them
Scott
Some may say we are living in a Global economy and others will say trouble is on the horizon for foreign investors or foreigners in general and still others will say Costa Rica needs our foreign money.
This may be a beginning of Tico Nationalism where political and legal changes will be coming. I don’t really know what it means other than to say this gentleman sees what is and has happened to his country.
The truth is it is happening all over the world. I remember when Rockerfeller Center was sold to investors from Japan. I remember the American outcry that our country is being taken over by foreigners. America has since accepted all the foreign investment and ownership of much of our property. The ownership of many of the luxury condos in South Beach is titled to European elite.
I believe after given this more thought that some Tico’s sold their land and made more money selling it to foreign investors than they would have reselling it to Ticos and bought different property while banking their profit. I believe that most of the Ticos that did this already had greater wealth than the average Tico.
So it’s the same old story the rich get richer, the poor stay poor and the middleclass can’t afford to buy a decent home in a decent area therfore they disappear.
Politicians lose touch with what the little person wants and needs while filling their pockets with graft. Different place same ole story. Yet how many of these new major developements are owned by Costa Rican developers who are getting the most money for their investment and hard work.
As you can see by my response there is a lot of ambiguity. This is not a simple issue and the response or understanding will differ by who you ask.
Edited on Jan 01, 2007 18:27
Edited on Jan 01, 2007 18:30
Well Vegas, you might be right about the rich getting richer and the poor getting poorer. How ever I believe in the near future Costa Rica is going to have to get tougher and restrictive on the influx of foreigners into their country other wise they will wake up and find more than a quarter of their land will be owned by none ticos.
In a small country like Costa Rica (half the size of Minnesota in area) they will not be able to handle the influx of foreigners with out some kind of impact on the average Tico. If the speculators are true, in the future a million gringos living in Costa Rica will have a large impact and not really a positive one.
I hope that the new laws will have some teeth and slow down the perpetual tourist and others.
Others are people that are living in Costa Rica which are illegal and now following the residency laws of the host goverment or are using Costa Rica to run from the laws in other nations such as Colombia.
I’m sure the Ticos who sold their land to foreigners for many times over what they bought it for, or what they would have sold it for to a Tico, are thoroughly enraged.
The fact that they then place these profits in offshore banks, or spend it on shopping sprees to Miami, means the rest of CR won’t benefit. Blame CR economic policies, not the Gringo speculator who overpaid for the land, and may or may not get it back when they bug out 2-5 years later.
So this reporter at La Republica wants to limit land sales? He must not own any himself.
At least all beaches in CR remain public property. Visit during Semana Santa and you’ll see all sorts of average Ticos enjoying a day on some of the most beautiful beaches in the world for the price of a bus ride.
Everyone keeps complaining about foreign ownership of land and companies resulting from a globalized economy. It’s interesting that ALL participant countries, both rich and poor, seem to complain equally.
Yes you are right about the Ticos that sold the land to the foreigners but what about those same foreigners that turn around and sell it for 4 times what they paid for it in less than a couple of years?
To what point will Costa Rica start to look like Purto Rico?My point is that the Ticos are losing or are going to lose control over their own land in the near century if they don’t put the brakes on and control their immigration soon.
Maybe what they need to do is have a lottery for people that want to immigrate like the U.S. does to the Costa Ricans?
Land, same as all types of asset, has one primary goal – what would give you the highest possible return (can be of another asset class/services/whatever) in the future. It sounds almost comical when people think that all their land is being bought and they would become tenants to the land owners. This is only true if the seller DOES NOT use that money wisely.
The basic form of this transaction is this: Tico seller gives land to Gringo buyer for dollars. Asset class land is exchanged to asset class money. Tico feels rich and starts buying cars/clothes/furniture. Therefore asset class money now becomes asset class luxuries. Unfortunately, Tico bought a depreciating asset class, which means in the future, when he wants to again exchange his assets, he gets even more less.
What is the problem here? Transaction #2, when Tico uses his dollar asset class and exchanged it into luxury asset class. However, if he used that to invest in a business or stock market, then he probably will be able to increase his asset value.
This is just basic economics. It funny how people have the perception that land is the most valueable asset, when studies upon studies have shown that in the long term, it barely beats inflation and lags stocks/bonds in appreciation. People are as always very short sighted and can only remember how their land has doubled in price the last 5 years, but they seem to have forgotten that it has not apprecaited much the previous 10 years (just as an example).
However, after missing out on the boom in prices, one has to have a scape goat. Surely it was those land buyers that are to blame.
Excellent reply Kimyoa economics 101. Let’s say for arguements sake say 25% of all the land ends up with foriegn owners and occupancy. Won’t these same foriegn occupants now have to pay taxes, insurance, goods, services and so on, thus adding to the local economy. If it becomes that these foriegn investors buy the land develope the land and resell this land back to Ticos at inflated prices and take the profits out of Costa Rica that the country will truly suffer. I don’t see that happening, I see the money staying in country along with greater stimulation to the country’s overall economy. I hope I am correct with my view that we new residents are good for Costa Rica, the Tico people and our own futures.
Yes, very true. The problem with most people are they get emotional when it comes to finances. Land is almost worthless, in some ways worse than the cow dung that lies on top of it, UNLESS it is developed or utilized to bring income to the owner. Even a house that you live in (which doesn’t seem to generate you income – of course you live in it) is worth a multiple of the potential rental income it can generate. When this balance is out of whack, then you might have a situation where you are over paying for the property.
People see a piece of land and pays you a handsome amount simply because he knows that if he develops it (or in some cases, neighboring properties are developed), then he has increased the value of that asset class (which is land) and will then pass it on to be converted into another asset class.
The United States, Germany, & Japan are three of the worlds biggest economies, and extremely wealthy. Both Germany and Japan are very small, but has disproportionate size of economy simply because businesses are how wealth is created. They make these things that other nations want to buy. Plain and simple.
However, with all this said, it is perfectly normal for people to feel threatened (oh no, the gringos are coming.. get real) simply because emotions overruns reality. Some very comical posts here: example – foreigners are coming to take our $5/ hour jobs; gringos are going to place a heavy burden on Costa Rica’s amazing health services. Separate facts from fiction.
Very interesting thoughts!
How ever you miss some vital points,The economy and land area of Costa Rica is much smaller maybe the examples that you have shown. If we take a look at the Pacific cost of Costa Rica I believe that a trend of more than 25% of the land is being sold to foreigners. When a gringo purchases a land and develops a home for less than $100,000 dollars and then sells it to another gringo for $299,000 this puts the normal Ticos out of the run for purchasing the home. It also gives the first gringo a hand full of money to run away with. So the thought of land is not worth the cow dung that sat on it is not true. Surly the first gringo would side with my argument.
Maybe this is why the first article in inside Costa Rica showed it as one of the hottest spots for investments.
I would also have to differ on the fact that in the Midwest of the U.S. property value has increased and out passed inflation and the stock market in the last 10 years. I have sold many homes that in 6 months made a 60,000 or more increase! Facts also show that real estate in the last 10 years has been the most solid investment. Even with the downtrend in the last year sellers are still making more money on the net sheet than in the past.
Second is that your thought process is developed by a gringo attitude and not a view of a Tico that is seeing his countries land being bought up by foreigners. It used to be that the average Tico would only have to worry about a small group of family land owners but now they have to worry about all of the foreigners coming in and buying the land.
I believe that in the future foreigners in Costa Rica will have to walk softly because Ticos will come to a point where they will not welcome the investments from land owners over their nationality!
To me it is interesting because Costa Rica is supposed to be known for environmental tourism, what will happen with the impact of a million gringos retiring in and developing land that will take away from that. Will it become like another Puerto Rico?
The poor state of the roads in Costa Rica ensures that not all land will be bought out by Gringos. While we like our SUVs, they are no match for some of the roads. Once jet-packs become the norm then you have something to worry about. Until then, tranquilo and pura vida.
Scott,
I merely wanted to clarify that if you takeout the emtional aspect in financial matters, the logic is plain and simple. With respect to the land question, you missed the part where I said that land is almost worthless UNLESS UTILIZED OR DEVELOPED. Your example shows a gringo buying the land THEN HE DEVELOPS A HOME that he sells to another gringo. The key here is DEVELOP.
I agree that if he runs aways with his money, then there is a drain of money out of the economy.
Your example of the last 10 years for real estate is very short sighted, I am talking about studies that goes back almost 100 years worth of data. No other asset class has outperformed the stock market, it is what it is. I am not saying real estate investing is bad, just that you have to do your math and determine if it is a good investment.
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